The sequester, explained
Posted by Suzy Khimm
on September 14, 2012 at 2:35 pm

The White House has released its plan explaining how the sequester’s mandatory spending cuts to defense and domestic spending will be implemented in 2013. Here’s the background on what the sequester is, how it happened and what happens from here:

What is the sequester?

It’s a package of automatic spending cuts that’s part of the Budget Control Act (BCA), which was passed in August 2011. The cuts, which are projected to total $1.2 trillion, are scheduled to begin in 2013 and end in 2021, evenly divided over the nine-year period. The cuts are also evenly split between defense spending — with spending on wars exempt — and discretionary domestic spending, which exempts most spending on entitlements like Social Security and Medicaid, as the Bipartisan Policy Center explains. The total cuts for 2013 will be $109 billion, according to the new White House report.

Under the BCA, the cuts were triggered to take effect beginning Jan. 1 if the supercommittee didn’t to agree to a $1.2 trillion deficit-reduction package by Nov. 23, 2011. The group failed to reach a deal, so the sequester was triggered.

Why does everyone hate the sequester so much?

Legislators don’t have any discretion with the across-the-board cuts: They are intended to hit all affected programs equally, though the cuts to individual areas will range from 7.6 percent to 9.6 percent (and 2 percent to Medicare providers). The indiscriminate pain is meant to pressure legislators into making a budget deal to avoid the cuts.

How would these cuts affect the country?

Since the details just came out, it’s not entirely clear yet. But many top defense officials have warned that the cuts will lead the military to be “hollowed out.” Democratic legislators have similarly warned about the impact on vital social programs. And defense, health care and other industries that are significantly dependent on federal spending say that major job losses will happen if the cuts end up taking effect.

At the same time, if legislators try to avoid the sequester without replacing it with real deficit reduction, the U.S. could face another credit downgrade.

Why did Congress and the White House agree to the sequester in the first place?

The government was approaching its debt limit, which needed to be raised through a congressional vote or else the country would default in early August 2011. While Democrats were in favor of a “clean” vote without strings attached, Republicans were demanding substantial cuts in exchange for raising the debt limit.

President Obama and congressional leaders ultimately agreed to the BCA, which would allow the debt ceiling to be raised by $2.1 trillion in exchange for the establishment of the supercommittee tied to the fall-back sequester, as the Center for Budget and Policy Priorities explains. The deal also includes mandatory spending reductions on top of the sequester by putting caps on non-entitlement discretionary spending that will reduce funding by $1 trillion by 2021.

Who supported the debt-ceiling deal?

Party leaders, the White House and most members of Congress supported the debt-ceiling deal: The BCA passed on a 268-161 vote in the House, with about one-third of House Republicans and half of House Democrats opposing it. It passed in the Senate, 74-26, with six Democratic senators and 19 Republican senators opposing it.

Can the sequester be avoided?

Yes, but only if Congress passes another budget deal that would achieve at least $1.2 trillion in deficit reduction. Both Democrats and Republicans have offered proposals to do so, but there still isn’t much progress on a deal. The political obstacles are the same as during the supercommittee negotiations: Republicans don’t want to raise taxes to generate revenue, while Democrats are reluctant to make dramatic changes to entitlement programs to achieve savings.

What happens from here?

No one on Capitol Hill thinks any deal will happen before Election Day. After Nov. 6, Congress will have just a few weeks to come up with an alternative to the sequester. The challenge is complicated by the fact that the Bush tax cuts, the payroll tax, unemployment benefits and a host of other tax breaks are all scheduled to expire Dec. 31. The cumulative impact of all of these scheduled cuts and changes is what’s popularly known as the fiscal cliff. There’s already talk of passing a short-term stopgap budget plan during the lame-duck session to buy legislators more time to come up with a grand bargain.

How will Congress fix the sequester? Nobody knows!
Posted by Suzy Khimm
on January 22, 2013 at 4:02 pm

The House GOP’s bill would prevent a debt-ceiling stand-off in February. But even if everything goes according to plan, the agreement won’t do anything to stop the automatic, across-the-board cuts from taking effect on March 1, which both parties insist they want to avoid.

Here’s why: The bill suspends the debt-ceiling for three months, with the understanding that the Senate will pass a budget resolution in the next few weeks. On Sunday, Senate Democrats indicated that they’ll be willing to go along with the plan, promising to pass a budget resolution by March 1 that they say will include both spending cuts and tax increases.

In theory, that budget document—a blueprint that sets broad targets for fiscal policy—could be a vehicle for a big deficit reduction deal that could replace or suspend the sequester. But even if the Senate came up with a budget blueprint by March 1, it’s highly unlikely that the House would simply pass that bill without batting an eye. Right now, their plan seems to be that “Rep. Paul Ryan (R-Wis.) will introduce a budget that will balance in 10 years — a proposal to cut dramatically more than his spending plan last year,” my colleagues report.

As such, the House and Senate would almost certainly have to go to conference to come up with a compromise between each chamber’s budget resolution—essentially kicking off another round of the negotiations that President Obama and House Speaker John Boehner (R-Ohio) had in the lead up to the fiscal cliff. That’s likely to be a protracted process—one that will probably take weeks after the March 1 sequester deadline to finish. So as it stands, Congress will still have to put together a separate plan if it wants to prevent the sequester cuts from going into effect on March 1.

Why, then, would House Republicans and Senate Democrats agree to a game plan that leaves the sequester off to the side, when everyone was so afraid of those cuts before Dec. 31? For Republicans, it’s another potential point of leverage: As during the fiscal cliff negotiations, they’ll likely demand cuts for any length of time that the sequester is suspended, which gives them another bite at the apple in terms of reducing spending.

Some conservatives claim they’d simply let the sequester take effect, as they’re viewed as “real cuts” as opposed to the empty promises they’ve heard from Congressional leaders. ”Clearly, we don’t think the way the sequester is set up will be helpful to national security or the defense industry,” a House GOP aide tells the National Review. “But we are committed to cutting spending in the federal government. So we’re not turning back on that.”

Democrats, however, may view such talk as simply bluster, knowing that there’d be far too much resistance from GOP quarters on the defense cuts for the sequester to ever fully take effect. For now, they’re just satisfied that Republicans appear to have capitulated over the debt-ceiling, at least temporarily, without being able to extract upfront cuts. In the relative scheme of things, they believe the sequester is bad policy but a potential debt-ceiling breach would be much worse. So they’ll deal with the next deadline when it comes to it, knowing that they’ve got a 1:1 ratio of revenue to spending cuts the last time they had to deal with the sequester.

Any liberals allowed in your bunker? I promise I'll keep my lecturing and moralizing to a minimum.

I am not lying at all. Couple times a year Bugs will come over & snag some Spam so that stock has dwindle a bit in the last 14 years. much of it is dated 1997-99
I keep it around to feed the bird dogs if SHTF. I wouldnt eat it. Bugs will

That can on the left dates back to late 70s or early 80s. Pops brought a bunch of it home after his unit spent a few weeks training out at fort Carson Colorado. I think I have 10 of them still

I am not lying at all. Couple times a year Bugs will come over & snag some Spam so that stock has dwindle a bit in the last 14 years. much of it is dated 1997-99
I keep it around to feed the bird dogs if SHTF. I wouldnt eat it. Bugs will

That can on the left dates back to late 70s or early 80s. Pops brought a bunch of it home after his unit spent a few weeks training out at fort Carson Colorado. I think I have 10 of them still

You sure the can on the left didn't come from DC? I thought the only thing that left there was canned pork?

__________________
"Political correctness is a doctrine, fostered by a delusional, illogical minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a t*rd by the clean end"

Hey, I'm not knocking it. You want to store shit in your cellar, power to you.

Isn't there a TV show about this? Have you tuned in? You might dig it.

I have seen it a few times. You cant prepare for everything. I mean, know one knows for sure what to expect . If the soviets nuke offutt afb base. My prepping will look pretty stupid.
Everyone IMO should have some basics in the food department. Then just rotate it as you eat it. Few coffee filters for helping the purifying of water are something I will always have on hand.

For the record/ I gave my parents,aunts & uncles a lot of shit over the years for doing it.
Then I became a father, I get it now

READ: The Senate Democrats’ internal budget memo: ‘Revenue Must Be Included’
Posted by Ezra Klein
on January 24, 2013 at 9:31 am

Sen. Patty Murray’s got her work cut out for her. It’s been less than a month since the Washington Democrat took the top spot on the Senate Budget Committee. But in that month, House Republicans used their debt-ceiling bill to highlight the fact that Senate Democrats haven’t passed a full budget resolution since 2009.

Senate Democrats have an excuse: Section 106 of the 2011 Budget Control Act said that the legislation would serve as a budget for fiscal years 2012 and 2013. But that excuse has run out — this year’s budgets will be for fiscal year 2014, and there’s nothing in the Budget Control Act saying it can serve as a budget for fiscal year 2014. And so Murray needs to do something Senate Democrats haven’t done in years: Get 51 votes, at least, for a full budget document.

The hard part about that isn’t putting together a budget. It’s getting her colleagues — particularly vulnerable Democrats up in 2014 — to sign on to whatever budget she develops. And so that’s where she’s starting.

This morning, Murray sent a memo to the Senate Democratic Caucus laying out her narrative of how the budget debate has gone so far and where it should go next. The 12-page memo, provided to Wonkblog by a Senate source, begins by recapping the deficit-reduction agreed to so far. “Over the last two years,” Murray writes, “Congress worked together with the Administration to pass legislation reducing deficits by at least $2.4 trillion. These first steps took us a significant way toward our deficit reduction goals. It is very important to note, however, that the vast majority of the savings in these new laws come from spending cuts.” Here’s Murray’s table recounting the deals:

Murray next compares that deficit reduction to Simpson-Bowles and Domenici-Rivlin, the major bipartisan deficit-reduction proposals. “These bipartisan frameworks include significant new revenue and have far more balance between spending cuts and revenue increases than the deficit reduction measures we’ve enacted to date. For instance, the President’s Fiscal Commission and the Senate’s Gang of Six each proposed roughly $4.8 trillion in deficit reduction over the 2012-2021 period, with over $2 trillion coming in the form of new revenue. Excluding the interest savings of roughly $800 billion, the two bipartisan efforts proposed a roughly 1:1 ratio of spending and revenue savings.” Here’s the table:

The conclusion of the memo — underlined and written in bold — is “Revenue Must be Included in Any Deal. Tackling our budget challenges requires both responsible spending cuts and additional revenue from those who can afford it most.”

What’s important about this section is that Murray lays out a very clear description of how she intends to raise the revenue: By cutting tax expenditures. “The recent agreement did little to address the skewed distribution of the benefits conferred to high-income households by tax expenditures,” she writes. “The top 1% of taxpayers receives nearly 25% of the benefit from these provisions. In total, tax expenditures were estimated to cost the Treasury $1.2 trillion in forgone revenue in 2011. That is nearly equivalent to what we spent on all discretionary programs in 2011.”

She also notes that Republicans have, in the very recent past, supported raising revenue by closing these expenditures. “Republicans know that our tax code is riddled with giveaways for the wealthiest Americans and biggest corporations. Speaker Boehner admitted as much late last year when he proposed to raise $800 billion for deficit reduction by closing ‘special-interest loopholes and deductions.’”

Republicans, however, have moved on from that position. “The current thinking is no one on the conservative side wants to use the tax expenditures for anything other than paying for the tax reform,” says Doug Holtz-Eakin, president of the conservative American Action Forum. “For those clinging to the tax reform train they want to use that money to get rates down.”

Rep. Paul Ryan, Murray’s counterpart on the House Budget Committee, made the same point at Wednesday Wall Street Journal breakfast. “They’ve already gotten the revenues,” he said, referring to the Democrats. “And if we believe in pro-growth tax reform – which is lower rates so we’re more competitive, with a broader base so we’re not doing social engineering through the tax code as much – and that’s pro-growth, which we believe – then you have to basically stick with where you are. Otherwise, you won’t have a good tax code.”

But for now, Murray doesn’t need to convince Ryan and the Republicans. She needs to convince her own colleagues. And this memo is her first real attempt to do so. You can read the full document below: